No “made-in-China” gear allowed for federal government’s new communications system

Online spying, network attacks and an international cyber cold war: these are the makings of a great sci-fi flick.

They're also things that have the Canadian government very concerned.

According to a report by PostMedia News, the Harper government has invoked a national security exemption on trade obligations, effectively banning foreign IT companies from working on a new federal telephone system in Ottawa.

In addition to limiting bidding to Canadian companies, the notice of proposed procurement states preference will be given to bidders using made-in-Canada gear. The only exception will be for equipment manufactured in the United States or Mexico.

The concern, according to PostMedia, is the potential for corrupt technology suppliers, "Manchurian microchips" and other Trojan hardware and gear — particularly from China — to be unwittingly installed in the federal systems, with backdoors giving their creators full access to the system.

Many western intelligence agencies — in Australia, in the U.K. and in the United States — have long fingered the Chinese government for supporting a web of sophisticated, global cyber espionage and online spying operations to infiltrate the computers of other governments and their advanced industries.

And if the past is any indication, Canada is clearly not immune to such attacks.

Last January, CBC News reported that that foreign hackers from China gained access to highly classified information at the Finance Department, Treasury Board, and Defence Research and Development Canada.

There has also been allegations of Chinese hacker attacks on private Canadian companies such as Nortel. In an interview with the CBC's As It Happens in February, Brian Shields, the former senior systems security adviser at Nortel, said spying by hackers was constant from about 2000 until 2009 and was a "considerable factor" in that company's bankruptcy.

"When they see what your business plans are, that's a huge advantage. It's unfair business practices that really bring down a company of this size," Shields said.

The Canadian government released a "cyber security strategy" in October 2010, in which it pledged to invest in securing Government of Canada systems, as well as partnering with other governments and with industry to ensure systems vital to Canadian security were protected.

The Public Safety department also established the Canadian Cyber Incident Response Centre to coordinate the federal response to "cyber security incidents" outside government networks, with a focus on guarding key infrastructure such as energy pipelines and power plants.